Kenanga Initiate Coverage on KIANJOO with TP of RM2.54

Kian Joo is the leading can manufacturing company in Malaysia. The company has a history of near to a century in the country; currently manufactures about 60% of local can market and has strong earnings track records. Kian Joo proposed bonus issue and rights of warrant recently. We believe the company’s decent dividend yield and strong fundamentals will attract long term investors given its strong track record. We are initiating coverage on Kian Joo with a BUY recommendation with a target price of RM2.54.

Comment:
1) The business of can manufacturing is a stable one as it banks on beverage sector. As a market leader in can manufacturing, the demand should be resilient.
2) Heard of some negative news on this Company about major shareholder tussle. But putting that aside, the historical dividend payment and business growth has been good thus far.
3) FY11E dividend yield of 6.1% seems attractive
4) The TP of RM2.54 provides about 15% upside (from current share price of RM2.21 as of 932am)